kimberley process mid-term report

Mid-term Report

United Arab EmiratesKP Chair 2016

Kimberley Process

KIMBERLEY PROCESS

CHAIRMAN’S MID-TERM MESSAGE

As we enter the second phase of the UAE’s one year tenure, as holders of the Kimberley Process Chairmanship, it is appropriate now to both review the results of our efforts to date in line with our strategy to continue achieving the aims and objectives tabled at inception.

A number of important initiatives, including humanitarian goals, are well underway. During visits to diamond producing nations we have reviewed and supported Kimberley Process efforts to ensure the resumption of production and export of rough diamonds under Kimberley Process mandates.

We have also implemented initiatives to improve technical assistance operations, a valuation review in consort with the OECD and an overhaul of communications, both internally and externally, through a pro-active strategy to disseminate information globally about the work of the Kimberley Process.

The detail of this Mid-Term Report demonstrates a robust foundation upon which the Kimberley Process will continue to build success.

Ahmed Bin SulayemUAE KP Chair 2016 & Executive Chairman DMCC

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Message from the KP Chair

Executive Summary

Mid-Term Overview

Venezuela

Central African Republic

Valuation Seminar

Developing Active Web Presence

Blockchain Technology

Communications Initiative

Africa Initiative

Media and PR Activity

Intersessional Meeting - Dubai

Facts and Figures

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INDEX

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Leadership was the key word in January 2016 when the UAE became the Kimberley Process Chair, the first Arab nation to do so, led by DMCC Executive Chairman, Ahmed Bin Sulayem.

Mr. Bin Sulayem began building a strategy to overcome many recognised challenges which, without change, could stifle progress in the diamond industry as a whole.

With a firm belief in the principles of the Kimberley Process, Mr. Bin Sulayem began his tenure by not only reviewing the effectiveness of the KP Chair position itself, but also by taking immediate and meaningful steps to enhance the role. He took a hands-on approach to review and support KP ground operations, travelling to diamond producing countries to meet governments, producers and miners.

“Only by visiting diamond producing countries is it possible to fully appreciate the challenges affecting all those involved in diamond production, from government regulators to hundreds of thousands of miners and their families whose livelihood depends on a transparent, accountable industry. This work will continue…”, said Mr. Bin Sulayem.

UAE KP CHAIR 2016MID-TERM EXECUTIVE SUMMARY

Incoming KP Chair, Ahmed Bin Sulayem, being congratulated by Paulo Mvika, Executive Director of Endiama.November 2015.

“Only by visiting diamond producing countries is it possible to fully appreciate the challenges affecting

all those involved in diamond production, from government regulators to hundreds of thousands of miners and their families whose livelihood depends

on a transparent, accountable industry. This work will continue…”

Ahmed Bin SulayemUAE KP Chair 2016

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UAE KP CHAIR 2016MID-TERM OVERVIEW

Mr. Bin Sulayem has invoked a sense of leadership in the KP Chair role; a fundamental departure from the traditional perception of the position, by creating and implementing a number of initiatives which will strengthen the KP mechanisms and make it more inclusive.

Slow progress in some areas due to communications challenges prompted the KP Chair to call for more open and speedier dialogue. By developing a new internal communications initiative, Mr. Bin Sulayem facilitated the opening of broader channels within the KP family, drawing on the vast experience of all those involved with a view to improving decision making within the KP structure.

The KP Chair has initiated monthly KP Working Groups teleconferences, which have focused the dialogue on procedures, compliance, governance and best practices.

LEADERSHIP COMMUNICATIONS COLLABORATION

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Concerns about security in the Central African Republic caused the cessation of diamond production, with exports stopping in 2013. The KP Chair devised the ‘Africa Initiative’ to help fast track dialogue not only between all parties in the CAR, but in other African nations concerned with rough diamond production and export. Mr. Bin Sulayem’s aim was to ensure dialogue and engagement with the continent’s diamond producing nations and their component parts.

Discussions on ‘Fair Share’ for miners are historic in the KP, especially in Africa which accounts for 65% of the market. Supporting the principles of ‘Fair Share’, the KP Chair initiated the long-awaited Valuation Seminar with OECD involvement. And for greater guidance on transparency and security of trade, the KP Chair has introduced the possibility of using Blockchain technology to create a seamless and continued global process for the Kimberley Process Certification Scheme.

INDUSTRY ADVOCACY FACILITATION STRATEGIC INITIATIVES

We have seen the results of support for the CAR Monitoring Team in the Central African Republic, with resulting certification and export of rough diamonds from one of the country’s key zones. Similarly, there has been great progress leading to the possible re-admission to the KP of the Bolivarian Republic of Venezuela.

Venezuela

T he Bol ivar ian Republ ic of Venezuela suspended

i tse l f f rom the Kimber ley Process in June 2008. No Review Mission to evaluate readiness for re-admission had been conducted by the KP unt i l Apr i l 2016.

The KP Chair 2016, Mr. Ahmed Bin Sulayem, visited Caracas, the Venezuelan capital, on 11 February 2016 to faci l i tate an agreement leading to the Review Mission.

Mr. Bin Sulayem was received by Mr. Eulogio Del Pino, the Minister of Oil and Mining, Mr. Nelson Merentes, the President of the Venezuela Central Bank and Mr. Jose Khan, Director of the Venezuelan Central Bank; responsible for the country’s mineral resources.

Dur ing the meet ing the

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Minister of Oi l and Mining and the KP Chair 2016 discussed the implementat ion of further steps for the ful l re-admission of the country to the KP family.

The KP Chair promised the UAE assistance to the government of Venezuela and to faci l i tate the organisation of the Review Mission. It was agreed that the Review Mission would be held within two months.

The Review Mission was held successfully in April 2016. Throughout the process, the KP Chair’s office was in close contact with the government of Venezuela to provide technical assistance. The report for the country’s re-admission was approved in the Committee on Participation and Chairmanship (CPC) in the first reading and was submitted to the government of Venezuela.

UAE KP CHAIR 2016MID-TERM REPORT

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At the May 23 to 26 KP Intersessional Meeting, held in Dubai, the Committee agreed to continue revising the recommendations for the government of Venezuela, during the following six weeks. An official proposal was then sent to the KP Chair to initiate a written procedure for the re-admission of Venezuela to the Kimberley Process.

Upon the recommendation of the CPC, the KP Chair 2016 has now initiated a written procedure for resuming the full participation of the Bolivarian Republic of Venezuela in the Kimberley Process, including resumption of rough diamond trading.

Ahmed Bin Sulayem meeting the Venezuelan Minister of Oil and Mines Elulogio Del Pino, the President of the Central Bank Nelson Merentes and the Director of the Central Bank Jose Khan

Central African Republic

The Central African Republic (CAR) is the world’s fourth

poorest country in GDP terms and has until recently relied upon the diamond trade to provide 40 per cent of its exports, with 25 percent of its 4 million population relying on the diamond industry for their livelihood. The CAR however, has been unable to export diamonds since 2013 because of concerns about security.

Sodiam - the main exporter of rough diamonds from the Central African Republic and the only operator with proper due diligence in place, wrote to the KP Chair to confirm that it had ceased operations in October 2015 due to continuing uncertainty.

The KP Chair forwarded the letter to the Chair of the Working

Group on Monitoring, the Chair of the Working Group on Diamond Experts and the CAR Review Mission Team Leader to request clarification on how this might impact current efforts of the Kimberley Process on resumption of exports from the CAR.

In an effort to kick start the CAR resumption of exports the KP Chair facilitated a meeting in Dubai, on March 10, between the government of the Central African Republic, represented by Joseph Agbo, Minister of Mines and Geology, and Sodiam. The Chair of the Committee on Participation and Chairmanship was also invited by the KP Chair and participated in the talks.

Following the negotiations facilitated by the KP Chair, both parties signed a Memorandum of Understanding,

Ahmed Bin Sulayem meeting the president of the Central African Republic, Faustin-Archange Touadéra.

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which reflected key provisions on the resumption of exports from the CAR. Later the same day, the KP Chair held a teleconference with the Chairs of the Working Groups announcing the agreement between the government of the CAR and Sodiam, who asked for a timetable for resumption of exports from Berberati Sous-Prefecture and other zones.

On March 18 the Kimberley Process CAR Monitoring Team endorsed the report on its field mission to Berberati (1-4 March 2016) and validated the proposal from the Follow-Up Committee to designate Berberati Sous-Prefecture as a “Compliant zone” as per the requirements of Administration Decision on Operational Framework for the Resumption of Exports of Rough Diamonds from the CAR.As a result of the progress

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achieved in March, upon the request from the Chair of the Working Group on Monitoring, the UAE accepted the temporary lead of the CAR Monitoring Team from the United States until after the Intersessional Meeting.

In April, the KP Chair contacted the Chair of the United Nations Security Council Committee (Res 2127) and informed the UN of the progress achieved by the Kimberley Process.

On May 3, the KP Chair received a reply from the Chair of the United Nations Security Council Committee concerning Central African Republic, who informed Ahmed Bin Sulayem that the update had been conveyed to the members of the Committee.

As a result of the efforts of the KP CAR Monitoring Team and a meeting between the KP Chair and the Minister of Energy and Hydraulics the KP further progress was achieved. On June 2, the CAR Monitoring Team confirmed that it had examined the proposed monthly export from the Compliant Zone of Berberati for a shipment of 3,702.89 cts.

It was also proposed that the UAE would continue leading the CAR Monitoring Team.

Later the same month Ahmed Bin Sulayem became the first Chairman of the Kimberley Process to visit the Central African Republic. The KP Chair met the CAR President Faustin-

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The KP Chair visiting the Central African Republic, June 2016.

Archange Touadera, who thanked the KP Chair for its support in providing assistance to the CAR to meet its KP mandates and enable the return of the country’s rough diamonds to the international marketplace. Both leaders also discussed the progress on the resumption of exports from other zones in the western part of the country.

Having a l ready achieved great progress on the s i tuat ion in the Centra l Afr ican Republ ic dur ing the f i rst hal f of i ts tenure, the KP Chair wi l l focus on improving the s i tuat ion in the country dur ing the next 6 months.

“The effective resumption of exports from the CAR was one of the main priorities of the KP chairmanship 2016 and now, I’m able to see for myself what that means in real terms right here on the ground.”

Ahmed Bin SulayemUAE KP Chair 2016

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Valuation Seminar

In any debate on fair trade and African beneficiation, the argument

is often made that African diamond producing nations do not receive a fair share of the value of their diamonds.

In light of this, the KP Chair has taken the lead to address this critical issue which has been the subject of much debate and discord between the three pillars of the KP coalition.

Over the course of 2016 and within the framework of the UAE’s Chairmanship of the Kimberley Process, the KP Chair and the OECD worked together to understand best practices in rough diamond valuation, based on in-depth engagement and in consultation with stakeholders.

The KP Chair believes efforts should be made to improve the conditions and benefits for Africa’s diamond producing countries, which are responsible for 65% of the world’s

diamond production.One idea, to help beneficiation, and to stimulate better returns for African diamond-producing countries, is to increase awareness and education on valuation and value.

As a result, the KP Chair began exploring this complex issue by gathering experts and mapping opportunities to find common approaches on rough diamond valuation by both exporting and importing countries, whilst recognising the complementary and crucial role for the private sector.

The KP Chair organised a Valuation Seminar in collaboration with the OECD that led to numerous fruitful negotiations with a wide variety of experts. In March 2016 the KP Chair conducted visits to Belgium and the United Kingdom to meet relevant parties including De Beers, Global Witness and Human Rights Watch.

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The KP Chair supported by the OECD successfully held the Special Forum in Dubai during the Intersessional Meeting attended by more than 250 delegates.

The KP Chair Special Forum received extensive media coverage.

Developing an Active Web Presence

At the beginning of his tenure, the KP Chair initiated a

development proposal to enhance the Kimberley Process website to further promote the KP to a broader, more discerning audience. Industry professionals will benefit from continual updates and the public will be able to see first-hand what the Kimberly Process is doing and how effective it is in applying its principles. The KP Chair’s office developed an action plan and strategy to revamp the KP Website.

The KP Chair held discussions about the KP Website during teleconferences with the Working Group Chairs in March, April and May 2016. During the Intersessional meeting in Dubai the KP Chair held a special session with the World Diamond Council and Working Group Chairs on the revamp of the KP Website. All parties agreed that the KP Chair will present an updated action plan taking into

consideration comments from the World Diamond Council.

At the teleconference in July 2016, the KP Chair presented a new action plan to the WDC and Working Group Chairs, who agreed to start working on an update of the current public Kimberley Process website.

The KP Chair is grateful to the KP Family for its input during six months of negotiations surrounding this important project and is proud to be playing a significant role in delivering the new website.

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With a view to combatting potential fraudulent activity

and to enhance security measures, Blockchain technology has been proposed by the KP Chair 2016.

Blockchain is a list of transactions that happen in a peer-to peer network. Those who join in the Blockchain can transfer value without the need for a central third party or ‘clearer’ like a bank. Blockchain is a distributed database, completely aligned to the structures of the Internet, which maintains a continuously growing list of encrypted data records, secure from tampering or revision.

The KP Chair’s office held talks with the members of The Blockchain Council of the Dubai Prime Minister’s office and researched how Blockchain technology can be used to prevent conflict diamonds from entering the market.The KP Chair’s office in collaboration with the UAE KP office discovered that Blockchain could be immensely important to the future of the Kimberley Process, and help to eradicate false KP certificates and

reduce the impact of human error while uploading data significantly.

The KP Chair engaged with Blockchain technology providers to adapt this technology to the Kimberley Process Certification Scheme.

Adopting Blockchain technology would be a long process requiring a great deal of research. Cost and complexity of implementation would also be significant. The KP Chair’s office is committed to the examination of its benefits and is working on a potential pilot project that would use Blockchain technology to monitor KP statistics. An update on the project will be provided at the Plenary meeting in November 2016.

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Blockchain technology within the Kimberley Process


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Establish a permanent public record of the digest of the physical property (diamonds) on the blockchain

Create an indisputable unchangeable chain of ownership transfer over the lifetime of the asset/contract

Real-time track of the transfer of diamonds on the blockchain as secured by cryptography

Replace physical certificates: Provide certificate of authority using digital signatures - sign using private/public cryptographic keys

In order to be involved in relevant Kimberley Process activities and assist Working Groups, the KP Chair initiated monthly teleconferences with the Working Group Chairs. During the calls, parties discussed the current situation in Venezuela, Central African Republic, Kimberley

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Process Website, Valuation Initiative, Intersessional Meeting and other relevant activities, which have resulted in significant progress across all issues on the agenda of the Kimberley Process.

Monthly teleconferences


The ‘Africa initiative’ is a commitment by the KP Chair

to keep a hands-on presence in diamond producing nations to help facilitate KP compliance, the fulfilment of KP mandates and give Africa a voice.

The KP Chair supported efforts made by the KP CAR Monitoring Team, which took concrete steps that helped facilitate the resumption of exports from compliant areas of the CAR and conducted a visit to the CAR to monitor progress.

In the second phase of its Africa Initiative, the KP Chair visited Angola and the Republic of South Africa, the two founding countries of the Kimberley Process, to discuss the ongoing issues of the Kimberley Process and the challenges faced by the diamond industry.

During the trip, the KP Chair held meetings with the president of Angola, José Eduardo dos Santos, who commended the KP Chair on achievements in Africa, especially with the developments in the Central African Republic. The leaders also discussed the ongoing process of re-admission of the Bolivarian Republic of Venezuela to the Kimberley Process.

KP Chair, Ahmed Bin Sulayem, meeting with Jose Eduardo dos Santos, president of Angola in June, 2016.

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During the meeting in Johannesburg with Mr. Mosebenzi Joseph Zwane, South African Minister of Mineral Resources, the KP Chair expanded on what had been achieved in the Central African Republic and the steps being taken there to secure a more stable future.

The KP Chair is expected to visit Uganda, Burkina Faso, Democratic Republic of Congo, Ghana, Zimbabwe, Botswana and Namibia in August/September this year. Noting that 65% of diamonds on the market today come from Africa, the KP Chair strongly believes that “Africa should have a voice”.

The KP Chair believes Valuation Seminar discussions should be expanded to include more African representatives, as undervalued diamonds coming from Africa affect the prosperity and livelihood not only of miners, but all people in African diamond producing countries.

Africa Initiative


$11 millionworth of media coverage generated

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Mediaand PR

UAE KP CHAIR 2016MID-TERM REPORT The KP Chair PR team’s strategy

to enhance the reputation of the Kimberley Progress whilst raising regional and global awareness of the organisation delivered 11 million USD worth of media coverage (Equivalent Advertising Value) as of July 2016.

From local to global mainstream and industry media PR activities have been as inclusive as possible.

The National newspaper accompanied the KP Chair in trips to Venezuela and Europe, and journalists were invited to attend several KP events during the Intersessional meeting in Dubai in May. Top sources include: Bloomberg, Rapaport/Diamonds.net, IDEX, The National and Al Bayan.

For the first six months of the UAE KP Chairmanship there was an increase of more than 462% of published articles in comparison with the four previous KP Chairmanships combined.

In order to improve results further, the KP Chair’s PR team will initiate new social media strategies engaging with platforms such as Facebook, Twitter and LinkedIn; engage with key media to provide them with exclusives to maximise international and local publicity around the Kimberley Process.

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H.E. Sultan Bin Saeed Al Mansouri, Minister of Economy of the United

Arab Emirates officially opened the Kimberley Process Intersessional Meeting, held in Dubai from 23-26 May, which attracted some 250 delegates. One of the key topics dominating the conference was ‘Diamond Valuation’ with the KP Chair organising a one-day Special Forum on rough diamond valuation, as a precursor to the full Kimberley Process Intersessional meetings. The forum was attended by industry leaders from across the diamond spectrum, including large mining corporations, mining experts and senior advisors from KP Working Groups. The Special Forum covered topics on rough diamond valuation challenges as well as the OECD’s work on enhancing the private sector contribution to responsible mineral supply chains, and support to developing countries, in raising revenue from executive industries. Kimberley Process members also held meetings within the working groups, where they discussed relevant issues including the resumption of exports from the CAR, the re-admission of Venezuela to the Kimberley Process and other items on the KP agenda related to the diamond industry. The Plenary meeting will be held Dubai in November 2016.

Intersessional Meeting, Dubai 2016


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kimberley process mid-term report

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